Noble Group plunges to $4.9 billion loss, in talks to wrap up debt deal

SINGAPORE (Reuters) - Commodities trader Noble Group plunged to a $4.9 billion annual loss, mainly due to losses on derivatives contracts, and said it was still in talks with creditors to finalize a rescue deal.

FILE PHOTO: The company logo of Noble Group is seen at its headquarters in Hong Kong March 23, 2015. REUTERS/Bobby Yip/File Photo

The $3.4 billion debt-for-equity swap is crucial for the survival of the Singapore-listed company, which has sold billions of dollars of assets, taken hefty writedowns and cut hundreds of jobs over the past three years to slash debt.

Noble is seeking to halve its senior debt and hand over 70 percent of the restructured business to a group of senior creditors, known as the Ad Hoc Group, while existing equity holders would be diluted to 10 percent and company management would end up owning up to 20 percent.

“The advisers to Noble and to other parties have commented that this is probably the most complex restructuring ever undertaken in Asia,” said Paul Brough, a restructuring specialist who took over as Noble’s chairman last year.

“We are encountering both support and opposition, but we are focused on reaching a conclusive agreement with the Ad Hoc Group and those discussions continue to be productive,” Brough said during a conference call with analysts late on Wednesday.

Noble reported a net loss of $4.9 billion for 2017 versus a net profit of $8.7 million a year earlier. Last week, it flagged a record annual loss of $4.78-$4.98 billion.

Founded in 1986 by Richard Elman, who rode a commodities bull run to build one of the world’s biggest traders, Noble was plunged into crisis in February 2015 when Iceberg Research questioned its books. Noble has defended its accounting.

Noble’s market value has fallen to just $228 million from $6 billion in February 2015.

The company, which had ambitions to rival global commodity traders such as Glencore and Vitol, has shrunk to its Asian roots, dealing in commodities such as coal and owning freight and liquefied natural gas (LNG) businesses.

Noble’s net loss included $1 billion from discontinued operations and $3.2 billion of exceptional charges made up of $2.1 billion in non-cash losses from the value of its commodity contracts and derivatives portfolio.

The company’s debt restructuring deal has been opposed by some bondholders and shareholders including Goldilocks Investment Co, an Abu Dhabi Financial Group equity fund.